Guest Post: The Oligarch by G. W. Eccles

Let us welcome today, G. W. Eccles, the author of The Oligarch, a thriller. In a Guest Post on Reviewing Shelf, he will be examining the real life struggle between Putin and the oligarchs.

Summary: Following his controversial election for a third term amid widespread protests and allegations of vote rigging, the Russian President is determined to destroy the oligarchs before they destroy him. When the global economic meltdown decimates their wealth, the President seizes this chance to demolish their power base. His greatest opponent – Anton Blok, owner of the mighty Tyndersk Kombinat – has a secret agenda and faces far more than just financial ruin as his empire threatens to fall apart, and the President knows that his old enemy will stop at nothing to avoid catastrophe. With battlelines drawn, he turns to Alex Leksin, an ex MI6 investigator of Russian descent, to thwart Blok’s plans. Against the challenge of hostile Arctic conditions, Leksin must tread a dangerous path through a labyrinth of corruption, terrorism and obfuscation until the exciting and unexpected denouement takes place in Russia’s northernmost seaport.

Trailer video of The Oligarch: A Thriller

Putin and the oligarchs

In the autumn of 1995 an event took place in Russia which in essence gave rise to the oligarchs. During the early years of Yeltsin’s regime the government was in real danger of running out of money. To ease the situation, it agreed to transfer temporary ownership of the State’s largest industrial companies to its major commercial banks as security for loans they would make to cover the country’s deficit. A dubious auction fixed who got what as security and for how much. When a year later the government failed to repay these loans, the commercial banks became permanent owners of the companies they had taken as security.

The values attributed to the security was a sham. As a result, after the loan defaulted, the bankers each acquired one or more massive industrial concerns ‘for a song’ and became oligarchs overnight. To give some idea of scale, the Abramovich-Berezovsky duo acquired control of Sibneft, the massive Russian oil concern, at this time for around £100 million. Abramovich later sold this stake for over $13 billion.

This programme became known as the ‘loans for shares’ scheme, and to some extent it forms the background to my new novel THE OLIGARCH: A THRILLER. At the start of the novel, a new Russian President has just been elected for a third term amid widespread protests and accusations of vote rigging. He is determined to destroy the power of the oligarchs and return
the companies they got through the ‘loans for shares scheme’ to State control. To this end he passes a new law which sets a time limit for the oligarchs to surrender their shares in these companies. Aware that one oligarch in particular (Blok, the owner of the mighty Tyndersk Kombinat in the Arctic Circle) will stop at nothing to hang on to his business empire, the
President turns to Alex Leksin, a business troubleshooter, to thwart Blok.

The President in the book is not Putin – although there may be certain similarities – and the story is of course fiction. But the basic premise – namely, that the Russian President would like to destroy the oligarchs and return Russia’s major companies back to State control – is rooted in fact.

When Putin took over from the ailing and often tipsy Yeltsin in 2000, he did nothing to disguise his disapproval of the sham by which the oligarchs had obtained their riches. However, nothing if not a pragmatist, he realised that he was in no position to reverse the process, so he effectively made a deal with the oligarchs. Put simply, he told them that (a) there were to be no further attempts to secure State assets, and (b) they could keep what they had provided that they did nothing to oppose him.

Many of the oligarchs took to heart what Putin told them and stayed out of politics. Some of them, though, reckoned that, since it had been the power of the media which they controlled that had put Putin into power, he was in their debt and should be a compliant, even if unwilling, partner. This was a big mistake. Putin failed to deliver on their demands, so a number of them started to fund opposition activities. They should have listened more carefully to what Putin had told them because, just as he had threatened from the outset, the second these oligarchs opposed him he acted to demolish their power base. Two well-known examples of this are Berezovsky (who fled to the UK to avoid criminal prosecution) and Khordorkosky (who is still in prison for tax evasion). Another more recent example is the oligarch owner of the dissident Novaya Gazeta newspaper, Lebedev, whose attempts to expose political corruption may have some link with the recent charges of hooliganism brought against him that could result in a five-year prison sentence.

By contrast, the other oligarchs who ‘behaved themselves’ have generally been left to run their business empires in comparative peace. Those who had control of the media, though, were soon forced to give this up since Putin had seen the power of media control at first hand when it effectively delivered him his first term as President. Putin has also ‘called in favours’. Abramovich in his first spell as governor of Chukotka spent – no doubt through altruism – over $1 billion on developing this poor region in Russia’s far north, but found his attempts to give up the role thwarted by Putin. Eventually he was allowed to stand down provided his ‘charitable’ activities in the region continued. Similarly, two years ago, Putin demanded that the oligarchs, as a group, should invest in the Russia’s electricity sector, threatening fines and even prosecution when some seemed hesitant to do so.

Most recently, Putin has suggested that the oligarchs who made fortunes out of the ‘loans for shares scheme’ should make a one-time windfall payment to legitimise their holdings. “We need to turn the page on this period,” he has explained. “We must establish the social legitimacy of private property.” He has not to date specified how this process might work or how much the payments are likely to be, but clearly this is another attack on the oligarchs in the making.

Who, though, would take a bet on Putin’s campaign stopping there? With another term of office likely to follow his current one, how long will it be before he really sharpens the knife and strips away their assets altogether, just as foreseen in THE OLIGARCH: A THRILLER? When this happens, remember that you read it first here!

George Eccles lived in Russia and Central Asia for ten years during the tumultuous period that followed the breakup of the Soviet Union. As a Moscow-based partner in one of the major financial services firms, his work brought him into regular contact with the murky world of real life oligarchs as they struggled to get to grips with the fallout of Yeltsin’s controversial ‘loans for shares’ scheme. He now lives in the South of France.

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Often seen with a nose buried in a book, you might spy me at a library while 300+ unread books adorn my shelf. At other times, I'm busy playing psychologist, travelling solo, eating out or looking for my new escapades. You will always find me doing too much all at once.